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Aegon Q1 2016 Results Presentation

Aegon’s underlying earnings and net income for the first quarter were impacted by volatile financial markets, which also had an impact on our capital position. Our Solvency II ratio nonetheless remains well within our target range, and also reflects the impact of the full share buyback and anticipated pay-out of the final dividend. For the full story visit http://www.aegon.com/results

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Helping people achieve a lifetime of financial security Q1 2016 Results Alex Wynaendts Darryl Button CEO CFO The Hague – May 12, 2016
2 Q1 results impacted by volatile markets Strong sales momentum reflects successful implementation of strategy • Underlying earnings were up as higher earnings from Europe more than offset lower US earnings • Solvency II ratio at end of Q1 2016 ~155% as a result of the share buyback, 2015 final dividend and negative capital generation driven by adverse market movements • Continued strong sales from fee-based deposit businesses Overview Note: Earnings = underlying earnings before tax +1.3pp compared with Q1 2015 -5pp compared with year-end 2015 excluding one-time items and market impacts of EUR (0.9)bn +36% compared with Q1 2015 € ~0.3bn ~155% Solvency IICapital generation +7% compared with Q1 2015 € 462m 7.3% Return on EquityEarnings € 3.6bn Sales
3 Underlying earnings before tax increased Results impacted by lower equity markets • In the Americas earnings declined mainly because of the recurring impact of the Q3 2015 actuarial assumption changes and model updates and lower fee income from lower average equity markets • Higher earnings from Europe as a result of lower DPAC amortization in the UK and normalization of surrenders in Poland • Asset Management earnings remained stable, while Asia improved and Holding costs were lower Earnings Underlying earnings before tax Q1 15 Americas Europe Asia, AAM and Holding Underlying earnings before tax Q1 16 432 (7) 28 9 462 Underlying earnings before tax comparison (EUR million)
4 Lower fee earnings in the Americas Lower average balances as a result of lower average equity markets • Unfavorable equity market returns during the first half of the quarter resulted in lower average account balances • Lower average account balances resulted in USD 15 million lower fee earnings compared with YE 2015 - Retirement Plans (RP) impacted by USD 4 million, Variable Annuities (VA) by USD 10 million and Mutual Funds (MF) by USD 1 million Earnings * Retirement Plans’ account balances, excluding Mercer acquired business which is priced on a per participant basis, as well as balances where the earnings are based off an investment spread VA account balances (USD billion) 66.7 64.7 66.8 Q4 15 ending Q1 16 avg Q1 16 ending RP* account balances (USD billion) 106.7 105.8 110.7 Q4 15 ending Q1 16 avg Q1 16 ending MF account balances (USD billion) 16.7 16.4 16.9 Q4 15 ending Q1 16 avg Q1 16 ending USD (4) million USD (10) million USD (1) million
5 Net income impacted by fair value items Losses on alternative investments and hedges Earnings • Alternative investment losses in Americas mainly the result of poor hedge funds returns • Losses on fair value items with an accounting match due to the differences between Solvency II and IFRS on Aegon’s interest rate hedges in the Netherlands. Liabilities moved by EUR (2.4) billion and derivatives moved by EUR 2.3 billion • Fair value hedging without an accounting match negative as a result of hedge mismatches in the US caused by high market volatility, and negative results in NL and the Holding FV investments EUR (104) million FV hedging with accounting match EUR (101) million FV hedging without accounting match EUR (152) million • Americas: (135) • Netherlands: 31 • US GMWB: 7 • Netherlands guarantees: (108) • US Macro: (92) • Netherlands: (26) • Holding: (41) • UK: 7 1 2 3 1 2 3 Net income Q1 2016 Income taxes Realized gains Run-off businesses Other charges Net impairments Fair value items UEBT Q1 2016 UEBT to net income development in Q1 2016 (EUR million) 462 (358) (36) (6) 28 54 (1) 143
6 Solvency II ratio at ~155% Ratios mainly impacted by adverse market impacts Capital * Pro forma basis includes reinsurance of 2/3 of UK annuity book pre-Part VII transfer • EUR 400 million share buyback • EUR 280 million proposed final 2015 dividend • Deducted from Solvency II own funds when management decision made • Pro forma UK annuity portfolio sale • Other • Wider mortgage spread in NL • Credit ratings migration • Staff pension plans IAS 19 loss • Second order impacts of lower interest rates (credit risk, longevity risk, volatility adjuster and risk margins) ~155%*~160% Q4 2015 Q1 2016 ~140%~135%~480% United States Netherlands +2% (6%) +5% (6%) United Kingdom* • Capital generation excluding market impacts and one- time items Capital return to shareholders OtherMarket impactsCapital generation Local solvency ratio by unit SII SIIRBC
7 ALM rebalancing in the Netherlands Results volatility due to difference in valuation curves Capital • NL guarantee hedges adjusted to Solvency II curve, resulting in lowered hedge durations • IFRS results volatility due to difference in valuation curves; IFRS curve to be reviewed in Q3 • IAS 19 and second order SCR impacts under Solvency II remain unhedged • Sensitivities to be updated Solvency II curve vs IFRS curve Q1 2016 (in years) -0.5% 0.5% 1.5% 2.5% 3.5% 0 10 20 30 40 50 Solvency II curve IFRS curve
8 Continued strong sales A result of strategic shift to fee-based businesses • Gross deposits up to EUR 30 billion driven by US Retirement Plans and Asset Management - Net deposits increased to EUR 7.9 billion • New life sales were lower as higher indexed universal life sales in the United States were more than offset by lower High Net Worth sales in Asia, and a decline of unit linked sales in Poland • New premium production for accident & health and general insurance declined as a result of lower portfolio takeovers and product re-pricing in the US Sales Note: Total sales consists of new life sales plus 1/10th of gross deposits plus new premiums for accident & health and general insurance; Gross and net deposits exclude run-off businesses and stable value solutions Deposits (EUR billion) 20.0 23.8 30.1 Q1 15 Q4 15 Q1 16 7.97.5 New life sales (EUR million) A&H and general insurance (EUR million) 299 273 266 Q1 15 Q4 15 Q1 16 329 238 286 Q1 15 Q4 15 Q1 16  Gross  Net 2.8
9 Final DOL Fiduciary Rule Better understanding the implications of the complex regulation Regulation • Comes into full effect as of January 1, 2018 (with certain aspects effective April 2017) • Concerns remain about access to financial advice for individuals • Work still needs to be done together with the industry and distribution networks to fully understand the impact of the final DOL rule • Focused on ensuring organizational readiness for the DOL rule • Developing a variety of solutions that support the needs of customers and distribution partners • Continue to help people achieve a lifetime of financial security Key takeaways Potential impact Actions • Short-term negative impact of 10 - 20% on VA sales in line with industry expectations • No meaningful impact on VA back book • Impact on other businesses ‒ Rollovers (-) ‒ Mutual funds (-) ‒ Retirement plans (+) • Higher implementation and compliance related expenses
10 Cost savings programs progressing Benefits of cost savings program to be reflected as of second half of 2016 Strategy Americas Netherlands Holding & Other Total annual cost savings of EUR 200 million by year end 2018 • Reduce complexity by transforming to ONE Transamerica • Completed voluntary separation incentive plan in Q1 2016 • Announced additional position eliminations in Q1 • USD 40 million of benefits to be reflected in second half of 2016 • Aligning reporting structure with business units • Reduce complexity and streamline processes • Reduction of legacy systems • Improve procurement across the organization • Cost savings identified on existing book in: • Operations • IT • Support • Commerce costs • Continuing reduction of legacy systems • Product simplification • Customer self-service
11 Executing on strategy Focus on core growth areas and capital return Strategy Sale of part of Dutch Non-Life business January 19 Sold commercial line non-life business to Allianz* Investor day January 13 Presented strategy update to the market Completion 1st tranche SBB March 31 Completed first tranche of EUR 200 million share buyback Sale of 2/3 UK annuity book April 11 Reinsured 2/3 of UK annuity portfolio to Rothesay Life BlackRock acquisition May 3 Acquired BlackRock’s UK DC platform and administration business* Launch 2nd tranche SBB April 1 Announced second tranche of EUR 200 million share buyback * Pending regulatory approval
1212Appendix For questions please contact Investor Relations +31 70 344 8305 ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands Appendix
13 Upcoming events May June London, May 19 Barclays European Franchise Summit The Hague, May 20 Annual General Meeting + Milan Rabobank Investor Conference London, May 25 JP Morgan Insurance Conference + Amsterdam ABN AMRO Equities Conference New York, May 31 Deutsche Bank Global Financials Conference Paris, June 7 Goldman Sachs Financials Conference London, June 8 Barclays UK Savings Conference Amsterdam, June 22 Kepler Cheuvreux One stop shop + London Rabobank Investor Conference Des Moines, June 28 Des Moines Insurance Conference London, June 23 Autonomous Insurance Rendez-Vous Calendar
14 Index Press subject to go directly to the section Appendix Q1 2016 Financials Slide 21-32 Q1 2016 Asset portfolio Slide 18-20 Strategy support Slide 15-17
15 9% 57% 34% Asia <1% Aegon at a glance Life insurance, pensions & asset management for 30 million customers Our roots date back to the first half of the 19th century Close to 30,000 employees (March 31, 2016) EmployeesHistoryFocus Underlying earnings before tax of EUR 462 million (2016 YTD) Revenue-generating investments are EUR 705 billion (March 31, 2016) in claims and benefits EUR 43 billion (2015) Paid outInvestmentsEarnings Americas Europe AAM Strategy support
16 Responsible business • Extend Responsible Investment approach to externally managed assets where possible • Investigate the risks represented by climate change, and adapt our investment strategy if required • Investigate the investment opportunities in the transition to a low-carbon economy as part of the Impact Investment program • Educate our customers, employees and society at large on issues surrounding retirement security, longevity and population aging • Explore opportunities for product and services that improve our customers’ Retirement Readiness and promote healthy aging Our commitment: “To act responsibly and to create positive impact for all our stakeholders” Putting our customers at the center of what we do Having a responsible investments approach Empowering our employees Promoting retirement readiness • Invest in our workforce by providing training and development opportunities related to the strategic direction of the company • Create a positive, open working environment that stimulates diversity and inclusion Aegon’s approach to sustainability is recognized externally Embedded in our operations • Deliver products and services customers can trust (market conduct standards) • Take value for the customer into account at every step of the product development process Strategy support
17 Committed to financial education Conduct research, educate the public and lead dialogue on financial issues Strategy support Helping people achieve a lifetime of financial security Publication of original research regarding: retirement, longevity, population aging, retirement security, healthcare coverage and health & wellness International presence Established Centers for longevity and retirement in the US, the Netherlands and Brazil Research publication The Centers for longevity and retirement are a collaboration of experts from Aegon’s businesses in Europe, the Americas and Asia Partnering up Building relationships with respected partners in the field of longevity, retirement and health Leveraging expertise
18 General account investments By geography March 31, 2016 amounts in EUR millions, except for the impairment data Americas Europe Asia Holding & other Total Cash/Treasuries/Agencies 18,316 20,952 261 62 39,592 Investment grade corporates 39,434 10,024 3,071 - 52,528 High yield (and other ) corporates 2,913 280 110 - 3,303 Emerging markets debt 1,502 1,474 107 - 3,083 Commercial MBS 4,899 634 526 - 6,059 Residential MBS 4,316 798 74 - 5,189 Non-housing related ABS 2,928 3,264 307 - 6,500 Housing related ABS - 987 - - 987 Subtotal 74,308 38,413 4,456 62 117,240 Residential mortgage loans 24 25,614 - - 25,638 Commercial mortgage loans 7,493 61 - - 7,553 Total mortgages 7,517 25,675 - - 33,192 Convertibles & preferred stock 295 2 - - 297 Common equity & bond funds 436 875 - 114 1,425 Private equity & hedge funds 1,971 122 - 3 2,095 Total equity like 2,701 999 - 117 3,817 Real estate 1,202 1,160 - - 2,362 Other 815 3,274 - 7 4,096 General account (excl. policy loans) 86,543 69,521 4,456 187 160,706 Policyholder loans 2,052 9 18 - 2,079 Investments general account 88,595 69,530 4,473 187 162,784 Impairments as bps (Q1 2016) 4 - 1 - 2 Asset portfolio
19 Structured assets and corporate bonds By rating March 31, 2016 amounts in EUR millions AAA AA A BBB <BBB NR Total Structured assets by rating Commercial MBS 4,396 1,068 317 144 135 - 6,059 Residential MBS 2,351 304 205 221 2,109 - 5,189 Non-housing related ABS 3,059 900 1,783 500 258 - 6,500 Housing related ABS - 289 669 28 - - 987 Total 9,805 2,560 2,975 893 2,502 - 18,735 Credits by rating IG Corporates 1,168 4,450 22,465 24,444 - - 52,528 High yield corporate - - 3 3 3,297 - 3,303 Emerging markets debt 82 167 1,042 1,066 720 6 3,083 Total 1,250 4,617 23,510 25,512 4,017 6 58,913 Cash/Treasuries/Agencies 39,592 Total 11,056 7,177 26,484 26,405 6,519 6 117,240 Asset portfolio
20 US energy & commodity exposure Direct and indirect by rating March 31, 2016 amounts in EUR millions AAA AA A BBB <BBB/NR Total Unrealized gain / (loss) Independent - 3 327 634 139 1,104 (57) Oil field services - 41 181 1 157 380 (77) Midstream - - 231 1,002 85 1,317 (21) Integrated 145 385 445 362 149 1,486 67 Refining - - - 128 48 176 (2) Total energy related 145 429 1,185 2,126 577 4,463 (89) Metals and mining - - 234 303 167 704 (77) Total corporate bonds 145 429 1,419 2,429 744 5,167 (166) Commercial paper - - - 69 - 69 - Real estate LP - - - - - 154 - Total general account exposure 145 429 1,419 2,499 744 5,390 (166) % of US general account.. 6.1% CDS exposure (notional) - - 31 232 49 313 Note: Amounts are fair value per March 31, 2016; 96.9% fair value to amortized cost for corporate bonds Asset portfolio
21 Underlying earnings Increased to EUR 462 million • Lower earnings in Americas as a result of lower fee income from lower markets, one-time employee expenses, reduction of VA closed block balances and recurring earnings impact following assumption changes and model updates implemented in Q3 2015 • Earnings in Europe increased as a result of the write down of DPAC in the UK and normalization of surrenders in Poland • Asia earnings improved due to higher earnings from High Net Worth businesses • Earnings in Asset Management remained high, as higher management and performance fees were offset by higher expenses mainly related to growth of the business Financials 45 38 45 Q1 15 Q4 15 Q1 16 Americas (USD million) Asia (USD million) Asset Management (EUR million) Europe (EUR million) 141 142 169 Q1 15 Q4 15 Q1 16 327 339 312 Q1 15 Q4 15 Q1 16 (3) 3 1 Q1 15 Q4 15 Q1 16 Underlying earnings before tax
22 Fair value items Impacted by alternative investments and hedge programs Total of EUR (358) million Financials Note: FV hedging with accounting match excludes changes in own credit spread and other non-hedged items Americas: (135)  Alternative investments (-)  Real estate (-)  Credit derivatives (-) Netherlands: 31  Real estate (+) US GMWB: 7  Interest rates (-)  Other (+) Netherlands guarantees: (108)  Credit related hedges (+)  Accounting mismatch on interest rate hedges (-)  Other (-) US macro hedging: (92)  Equity (-)  IUL product hedge (-)  Interest rate hedges (+)  Other (-) Other: (1) • Chinese equity portfolio (-) • Other FV items (+) FV hedging with accounting match EUR (101) million Derivatives ∆: EUR 2,314m Liability ∆: EUR (2,415)m FV hedging without accounting match EUR (152) million Derivatives ∆: EUR (110)m Liability ∆: EUR (42)m FV other EUR (1) million FV investments EUR (104) million Netherlands: (26)  Duration management (-)  Other (+) UK: 7  Inflation hedge (+)  Equity (+) Holding: (41)  Perpetual securities and LT debt (-)
23 Gross deposits Increased to EUR 30.1 billion • Higher gross deposits in the Americas as a result of the Mercer acquisition, growth in pensions and mutual funds, partially offset by lower deposits in variable annuities • Gross deposits in Europe up 12% due to continued strong performance from Knab and growth of the platform business in the UK • Gross deposits in Asia were down as the comparable quarter in 2015 benefited from higher deposits in anticipation of lower commissions on VA in Japan • Growth in third party gross flows in Asset Management more than doubled as a result of higher flows in AIFMC, driven by a higher recognized gross flows, and proportional inclusion of LBPAM Financials Americas (USD billion) Asia (USD million) Asset Management (Third party; EUR billion) Europe (EUR billion) Gross deposits 3.1 3.1 3.4 Q1 15 Q4 15 Q1 16 228 68 80 Q1 15 Q4 15 Q1 16 13.0 9.3 14.9 Q1 15 Q4 15 Q1 16 5.8 12.2 13.2 Q1 15 Q4 15 Q1 16
24 New life sales Amounted to EUR 266 million • New life sales in the Americas were stable, as higher indexed UL sales offset lower sales in standard UL and term life products • Lower new life sales in Europe as higher sales in Turkey were more than offset by lower sales in Poland • New life sales in Asia declined, as higher sales in strategic partnerships were more than offset by lower sales from High Net Worth businesses Financials Americas (USD million) Asia (USD million) Europe (EUR million) New life sales 93 94 85 Q1 15 Q4 15 Q1 16 158 167 158 Q1 15 Q4 15 Q1 16 73 29 41 Q1 15 Q4 15 Q1 16
25 MCVNB of EUR 133 million Impacted by margin pressure, low interest rates and methodology change • Higher MCVNB in the Americas mainly driven by a higher contribution from life insurance, offsetting a lower contribution from VA • MCVNB in Europe decreased as a result of a change in the product mix for pensions in the Netherlands • MCVNB in Asia declined, driven by lower sales, lower interest rates and widening credit spreads Financials Americas (USD million) Asia (USD million) Europe (EUR million) 64 46 56 Q1 15 Q4 15 Q1 16 70 111 89 Q1 15 Q4 15 Q1 16 16 2 (5) Q1 15 Q4 15 Q1 16 Market consistent value of new business Note: There is no MCVNB recognized on new Asset Management business
26 Operating expenses Increased to EUR 960 million • Operating expenses in the Americas increased driven by the Mercer acquisition and one-time employee expenses • Operating expenses in Europe remained stable as lower restructuring expenses in NL were offset by expense growth in the UK as a result of upgrading policies from the back book and Spain • Increase in operating expenses in Asia driven by higher expenses in China and the increase in Aegon’s stake in its strategic partnership in India from 26% to 49% • Operating expenses in Asset Management up mainly due to business growth, currency movements, elevated project-related expenses and the inclusion of costs relating to the partnership with LBPAM Financials Operating expenses Americas (USD million) Asia (USD million) Asset Management (EUR million) Europe (EUR million) 359 388 360 Q1 15 Q4 15 Q1 16 450 472 479 Q1 15 Q4 15 Q1 16 38 36 43 Q1 15 Q4 15 Q1 16 96 126 114 Q1 15 Q4 15 Q1 16
27 Capital generation and capital buffer Impacted by adverse financial markets • Capital generation of EUR 0.3 billion, excluding market impacts of EUR (0.7) billion and one-time items of EUR (0.2) billion • Capital buffer in the holding decreased to EUR 1.0 billion driven by completion of the first tranche of the share buyback and investments in country units Financials Capital generation (EUR billion) Holding capital buffer development (EUR billion) Q1 16 Capital generation (0.6) Market impacts & one-time items (0.9) Capital generation excluding market impacts & one-time items 0.3 Holding funding & operating expenses (0.1) Free cash flow 0.2 Q4 15 Q1 16 Starting position 1.8 1.4 Net dividends received from units 0.2 (0.1) Acquisitions & divestments - - Dividends & share buyback - (0.2) Funding & operating expenses (0.1) (0.1) Leverage issuances/redemptions (0.5) - Other 0.0 (0.0) Ending position 1.4 1.0
28 2012 2013 2014 2015 Q1 2016  Payout annuities 0.5 0.5 0.4 0.4 0.4  Institutional spread-based business 0.6 0.4 0.3 0.3 0.2  BOLI/COLI 0.5 0.5 0.6 0.4 0.4  Life reinsurance 1.1 0.7 0.6 0.6 0.3 2.7 2.1 2.0 1.7 1.3 Capital allocated to run-off businesses Further reduced in Q1 2016 • Current capital allocated to run-off businesses of USD 1.3 billion • Capital intensive run-off businesses negatively impact return on equity - Capital allocated to run-off businesses included in RoE calculations, but earnings are excluded • Reduction of USD 0.3 billion of capital due to accounting change - Part of the ambition to reduce capital allocated to run-off businesses by USD 1 billion by 2018 Financials Allocated capital to run-off businesses (USD billion)
29 Main economic assumptions US NL UK Exchange rate against euro 1.10 n.a. 0.71 Annual gross equity market return (price appreciation + dividends) 8% 7% 7% US NL UK 10-year government bond yields Develop in line with forward curves per year-end 2015 10-year government bond yields Grade to 4.25% in 10 years time Credit spreads Grade from current levels to 110 bps over four years Bond funds Return of 4% for 10 years and 6% thereafter Money market rates Remain flat at 0.2% for two quarters followed by a 9.5-year grading to 2.5% Main assumptions for US DAC recoverability Main assumptions for financial targets Overall assumptions Financials
30 Earnings sensitivities To equity markets and reinvestment yields • Protection of capital position main purpose of macro hedging program • IFRS accounting mismatch between hedges and liabilities - GMIB liability carried at amortized cost (SOP 03-1) - Macro hedge carried at fair value Financials * Average impact of flat reinvestment yields on underlying earnings per quarter in 2016, 2017 and 2018 compared to 2015 Macro hedge equity sensitivity estimates Total equity return in quarter Fair value items impact -8% ~USD (10) million +2% (base case) ~USD (60) million +12% ~USD (140) million Estimated sensitivity for underlying earnings to flat reinvestment yields* 2016 ~USD (10) million per quarter 2017 ~USD (15) million per quarter 2018 ~USD (25) million per quarter • Limited reinvestment risk moderates impact on underlying earnings of low US interest rates - ~5% of general account assets reinvested per annum as a result of declining spread balances
31 Investing in Aegon • Aegon ordinary shares - Traded on Euronext Amsterdam since 1969 and quoted in euros • Aegon New York Registry Shares (NYRS) - Traded on NYSE since 1991 and quoted in US dollars - One Aegon NYRS equals one Aegon Amsterdam-listed common share - Cost effective way to hold international securities Financials Aegon’s ordinary shares Aegon’s New York Registry Shares Ticker symbol AGN NA ISIN NL0000303709 SEDOL 5927375NL Trading Platform Euronext Amsterdam Country Netherlands Aegon NYRS contact details Broker contacts at Citibank: Telephone: New York: +1 212 723 5435 London: +44 207 500 2030 E-mail: citiadr@citi.com Ticker symbol AEG US NYRS ISIN US0079241032 NYRS SEDOL 2008411US Trading Platform NYSE Country USA NYRS Transfer Agent Citibank, N.A.
32 Disclaimer Cautionary note regarding non-IFRS measures This document includes the following non-IFRS financial measures: underlying earnings before tax, income tax, income before tax and market consistent value of new business. These non-IFRS measures are calculated by consolidating on a proportionate basis Aegon’s joint ventures and associated companies. The reconciliation of these measures, except for market consistent value of new business, to the most comparable IFRS measure is provided in note 3 ‘Segment information’ of Aegon’s Condensed Consolidated Interim Financial Statements. Market consistent value of new business is not based on IFRS, which are used to report Aegon’s primary financial statements and should not be viewed as a substitute for IFRS financial measures. Aegon may define and calculate market consistent value of new business differently than other companies. Aegon believes that these non-IFRS measures, together with the IFRS information, provide meaningful information about the underlying operating results of Aegon’s business including insight into the financial measures that senior management uses in managing the business. In addition, return on equity is a ratio using a non-IFRS measure and is calculated by dividing the net underlying earnings after cost of leverage by the average shareholders’ equity excluding the preferred shares, the revaluation reserve and the reserves related to defined benefit plans. Local currencies and constant currency exchange rates This document contains certain information about Aegon’s results, financial condition and revenue generating investments presented in USD for the Americas and Asia, and in GBP for the United Kingdom, because those businesses operate and are managed primarily in those currencies. Certain comparative information presented on a constant currency basis eliminates the effects of changes in currency exchange rates. None of this information is a substitute for or superior to financial information about Aegon presented in EUR, which is the currency of Aegon’s primary financial statements. Forward-looking statements The statements contained in this document that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, is confident, will, and similar expressions as they relate to Aegon. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Aegon undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following:  Changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom;  Changes in the performance of financial markets, including emerging markets, such as with regard to: ► The frequency and severity of defaults by issuers in Aegon’s fixed income investment portfolios; ► The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities Aegon holds; and ► The effects of declining creditworthiness of certain private sector securities and the resulting decline in the value of sovereign exposure that Aegon holds;  Changes in the performance of Aegon’s investment portfolio and decline in ratings of Aegon’s counterparties;  Consequences of a potential (partial) break-up of the euro or the potential exit of the United Kingdom and/or Greece from the European Union;  The frequency and severity of insured loss events;  Changes affecting longevity, mortality, morbidity, persistence and other factors that may impact the profitability of Aegon’s insurance products;  Reinsurers to whom Aegon has ceded significant underwriting risks may fail to meet their obligations;  Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels;  Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates;  Changes in the availability of, and costs associated with, liquidity sources such as bank and capital markets funding, as well as conditions in the credit markets in general such as changes in borrower and counterparty creditworthiness;  Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;  Changes in laws and regulations, particularly those affecting Aegon’s operations’ ability to hire and retain key personnel, the products Aegon sells, and the attractiveness of certain products to its consumers;  Regulatory changes relating to the pensions, investment, and insurance industries in the jurisdictions in which Aegon operates;  Standard setting initiatives of supranational standard setting bodies such as the Financial Stability Board and the International Association of Insurance Supervisors or changes to such standards that may have an impact on regional (such as EU), national or US federal or state level financial regulation or the application thereof to Aegon, including the designation of Aegon by the Financial Stability Board as a Global Systemically Important Insurer (G-SII).  Changes in customer behavior and public opinion in general related to, among other things, the type of products also Aegon sells, including legal, regulatory or commercial necessity to meet changing customer expectations;  Acts of God, acts of terrorism, acts of war and pandemics;  Changes in the policies of central banks and/or governments;  Lowering of one or more of Aegon’s debt ratings issued by recognized rating organizations and the adverse impact such action may have on Aegon’s ability to raise capital and on its liquidity and financial condition;  Lowering of one or more of insurer financial strength ratings of Aegon’s insurance subsidiaries and the adverse impact such action may have on the premium writings, policy retention, profitability and liquidity of its insurance subsidiaries;  The effect of the European Union’s Solvency II requirements and other regulations in other jurisdictions affecting the capital Aegon is required to maintain;  Litigation or regulatory action that could require Aegon to pay significant damages or change the way Aegon does business;  As Aegon’s operations support complex transactions and are highly dependent on the proper functioning of information technology, a computer system failure or security breach may disrupt Aegon’s business, damage its reputation and adversely affect its results of operations, financial condition and cash flows;  Customer responsiveness to both new products and distribution channels;  Competitive, legal, regulatory, or tax changes that affect profitability, the distribution cost of or demand for Aegon’s products;  Changes in accounting regulations and policies or a change by Aegon in applying such regulations and policies, voluntarily or otherwise, which may affect Aegon’s reported results and shareholders’ equity;  The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including Aegon’s ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;  Catastrophic events, either manmade or by nature, could result in material losses and significantly interrupt Aegon’s business; and  Aegon’s failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving and excess capital and leverage ratio management initiatives. Further details of potential risks and uncertainties affecting Aegon are described in its filings with the Netherlands Authority for the Financial Markets and the US Securities and Exchange Commission, including the Annual Report. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, Aegon expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Aegon’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

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Aegon Q1 2016 Results Presentation

  • 1.
    Helping people achievea lifetime of financial security Q1 2016 Results Alex Wynaendts Darryl Button CEO CFO The Hague – May 12, 2016
  • 2.
    2 Q1 results impactedby volatile markets Strong sales momentum reflects successful implementation of strategy • Underlying earnings were up as higher earnings from Europe more than offset lower US earnings • Solvency II ratio at end of Q1 2016 ~155% as a result of the share buyback, 2015 final dividend and negative capital generation driven by adverse market movements • Continued strong sales from fee-based deposit businesses Overview Note: Earnings = underlying earnings before tax +1.3pp compared with Q1 2015 -5pp compared with year-end 2015 excluding one-time items and market impacts of EUR (0.9)bn +36% compared with Q1 2015 € ~0.3bn ~155% Solvency IICapital generation +7% compared with Q1 2015 € 462m 7.3% Return on EquityEarnings € 3.6bn Sales
  • 3.
    3 Underlying earnings beforetax increased Results impacted by lower equity markets • In the Americas earnings declined mainly because of the recurring impact of the Q3 2015 actuarial assumption changes and model updates and lower fee income from lower average equity markets • Higher earnings from Europe as a result of lower DPAC amortization in the UK and normalization of surrenders in Poland • Asset Management earnings remained stable, while Asia improved and Holding costs were lower Earnings Underlying earnings before tax Q1 15 Americas Europe Asia, AAM and Holding Underlying earnings before tax Q1 16 432 (7) 28 9 462 Underlying earnings before tax comparison (EUR million)
  • 4.
    4 Lower fee earningsin the Americas Lower average balances as a result of lower average equity markets • Unfavorable equity market returns during the first half of the quarter resulted in lower average account balances • Lower average account balances resulted in USD 15 million lower fee earnings compared with YE 2015 - Retirement Plans (RP) impacted by USD 4 million, Variable Annuities (VA) by USD 10 million and Mutual Funds (MF) by USD 1 million Earnings * Retirement Plans’ account balances, excluding Mercer acquired business which is priced on a per participant basis, as well as balances where the earnings are based off an investment spread VA account balances (USD billion) 66.7 64.7 66.8 Q4 15 ending Q1 16 avg Q1 16 ending RP* account balances (USD billion) 106.7 105.8 110.7 Q4 15 ending Q1 16 avg Q1 16 ending MF account balances (USD billion) 16.7 16.4 16.9 Q4 15 ending Q1 16 avg Q1 16 ending USD (4) million USD (10) million USD (1) million
  • 5.
    5 Net income impactedby fair value items Losses on alternative investments and hedges Earnings • Alternative investment losses in Americas mainly the result of poor hedge funds returns • Losses on fair value items with an accounting match due to the differences between Solvency II and IFRS on Aegon’s interest rate hedges in the Netherlands. Liabilities moved by EUR (2.4) billion and derivatives moved by EUR 2.3 billion • Fair value hedging without an accounting match negative as a result of hedge mismatches in the US caused by high market volatility, and negative results in NL and the Holding FV investments EUR (104) million FV hedging with accounting match EUR (101) million FV hedging without accounting match EUR (152) million • Americas: (135) • Netherlands: 31 • US GMWB: 7 • Netherlands guarantees: (108) • US Macro: (92) • Netherlands: (26) • Holding: (41) • UK: 7 1 2 3 1 2 3 Net income Q1 2016 Income taxes Realized gains Run-off businesses Other charges Net impairments Fair value items UEBT Q1 2016 UEBT to net income development in Q1 2016 (EUR million) 462 (358) (36) (6) 28 54 (1) 143
  • 6.
    6 Solvency II ratioat ~155% Ratios mainly impacted by adverse market impacts Capital * Pro forma basis includes reinsurance of 2/3 of UK annuity book pre-Part VII transfer • EUR 400 million share buyback • EUR 280 million proposed final 2015 dividend • Deducted from Solvency II own funds when management decision made • Pro forma UK annuity portfolio sale • Other • Wider mortgage spread in NL • Credit ratings migration • Staff pension plans IAS 19 loss • Second order impacts of lower interest rates (credit risk, longevity risk, volatility adjuster and risk margins) ~155%*~160% Q4 2015 Q1 2016 ~140%~135%~480% United States Netherlands +2% (6%) +5% (6%) United Kingdom* • Capital generation excluding market impacts and one- time items Capital return to shareholders OtherMarket impactsCapital generation Local solvency ratio by unit SII SIIRBC
  • 7.
    7 ALM rebalancing inthe Netherlands Results volatility due to difference in valuation curves Capital • NL guarantee hedges adjusted to Solvency II curve, resulting in lowered hedge durations • IFRS results volatility due to difference in valuation curves; IFRS curve to be reviewed in Q3 • IAS 19 and second order SCR impacts under Solvency II remain unhedged • Sensitivities to be updated Solvency II curve vs IFRS curve Q1 2016 (in years) -0.5% 0.5% 1.5% 2.5% 3.5% 0 10 20 30 40 50 Solvency II curve IFRS curve
  • 8.
    8 Continued strong sales Aresult of strategic shift to fee-based businesses • Gross deposits up to EUR 30 billion driven by US Retirement Plans and Asset Management - Net deposits increased to EUR 7.9 billion • New life sales were lower as higher indexed universal life sales in the United States were more than offset by lower High Net Worth sales in Asia, and a decline of unit linked sales in Poland • New premium production for accident & health and general insurance declined as a result of lower portfolio takeovers and product re-pricing in the US Sales Note: Total sales consists of new life sales plus 1/10th of gross deposits plus new premiums for accident & health and general insurance; Gross and net deposits exclude run-off businesses and stable value solutions Deposits (EUR billion) 20.0 23.8 30.1 Q1 15 Q4 15 Q1 16 7.97.5 New life sales (EUR million) A&H and general insurance (EUR million) 299 273 266 Q1 15 Q4 15 Q1 16 329 238 286 Q1 15 Q4 15 Q1 16  Gross  Net 2.8
  • 9.
    9 Final DOL FiduciaryRule Better understanding the implications of the complex regulation Regulation • Comes into full effect as of January 1, 2018 (with certain aspects effective April 2017) • Concerns remain about access to financial advice for individuals • Work still needs to be done together with the industry and distribution networks to fully understand the impact of the final DOL rule • Focused on ensuring organizational readiness for the DOL rule • Developing a variety of solutions that support the needs of customers and distribution partners • Continue to help people achieve a lifetime of financial security Key takeaways Potential impact Actions • Short-term negative impact of 10 - 20% on VA sales in line with industry expectations • No meaningful impact on VA back book • Impact on other businesses ‒ Rollovers (-) ‒ Mutual funds (-) ‒ Retirement plans (+) • Higher implementation and compliance related expenses
  • 10.
    10 Cost savings programsprogressing Benefits of cost savings program to be reflected as of second half of 2016 Strategy Americas Netherlands Holding & Other Total annual cost savings of EUR 200 million by year end 2018 • Reduce complexity by transforming to ONE Transamerica • Completed voluntary separation incentive plan in Q1 2016 • Announced additional position eliminations in Q1 • USD 40 million of benefits to be reflected in second half of 2016 • Aligning reporting structure with business units • Reduce complexity and streamline processes • Reduction of legacy systems • Improve procurement across the organization • Cost savings identified on existing book in: • Operations • IT • Support • Commerce costs • Continuing reduction of legacy systems • Product simplification • Customer self-service
  • 11.
    11 Executing on strategy Focuson core growth areas and capital return Strategy Sale of part of Dutch Non-Life business January 19 Sold commercial line non-life business to Allianz* Investor day January 13 Presented strategy update to the market Completion 1st tranche SBB March 31 Completed first tranche of EUR 200 million share buyback Sale of 2/3 UK annuity book April 11 Reinsured 2/3 of UK annuity portfolio to Rothesay Life BlackRock acquisition May 3 Acquired BlackRock’s UK DC platform and administration business* Launch 2nd tranche SBB April 1 Announced second tranche of EUR 200 million share buyback * Pending regulatory approval
  • 12.
    1212Appendix For questions pleasecontact Investor Relations +31 70 344 8305 ir@aegon.com P.O. Box 85 2501 CB The Hague The Netherlands Appendix
  • 13.
    13 Upcoming events May June London,May 19 Barclays European Franchise Summit The Hague, May 20 Annual General Meeting + Milan Rabobank Investor Conference London, May 25 JP Morgan Insurance Conference + Amsterdam ABN AMRO Equities Conference New York, May 31 Deutsche Bank Global Financials Conference Paris, June 7 Goldman Sachs Financials Conference London, June 8 Barclays UK Savings Conference Amsterdam, June 22 Kepler Cheuvreux One stop shop + London Rabobank Investor Conference Des Moines, June 28 Des Moines Insurance Conference London, June 23 Autonomous Insurance Rendez-Vous Calendar
  • 14.
    14 Index Press subject togo directly to the section Appendix Q1 2016 Financials Slide 21-32 Q1 2016 Asset portfolio Slide 18-20 Strategy support Slide 15-17
  • 15.
    15 9% 57% 34% Asia <1% Aegon ata glance Life insurance, pensions & asset management for 30 million customers Our roots date back to the first half of the 19th century Close to 30,000 employees (March 31, 2016) EmployeesHistoryFocus Underlying earnings before tax of EUR 462 million (2016 YTD) Revenue-generating investments are EUR 705 billion (March 31, 2016) in claims and benefits EUR 43 billion (2015) Paid outInvestmentsEarnings Americas Europe AAM Strategy support
  • 16.
    16 Responsible business • ExtendResponsible Investment approach to externally managed assets where possible • Investigate the risks represented by climate change, and adapt our investment strategy if required • Investigate the investment opportunities in the transition to a low-carbon economy as part of the Impact Investment program • Educate our customers, employees and society at large on issues surrounding retirement security, longevity and population aging • Explore opportunities for product and services that improve our customers’ Retirement Readiness and promote healthy aging Our commitment: “To act responsibly and to create positive impact for all our stakeholders” Putting our customers at the center of what we do Having a responsible investments approach Empowering our employees Promoting retirement readiness • Invest in our workforce by providing training and development opportunities related to the strategic direction of the company • Create a positive, open working environment that stimulates diversity and inclusion Aegon’s approach to sustainability is recognized externally Embedded in our operations • Deliver products and services customers can trust (market conduct standards) • Take value for the customer into account at every step of the product development process Strategy support
  • 17.
    17 Committed to financialeducation Conduct research, educate the public and lead dialogue on financial issues Strategy support Helping people achieve a lifetime of financial security Publication of original research regarding: retirement, longevity, population aging, retirement security, healthcare coverage and health & wellness International presence Established Centers for longevity and retirement in the US, the Netherlands and Brazil Research publication The Centers for longevity and retirement are a collaboration of experts from Aegon’s businesses in Europe, the Americas and Asia Partnering up Building relationships with respected partners in the field of longevity, retirement and health Leveraging expertise
  • 18.
    18 General account investments Bygeography March 31, 2016 amounts in EUR millions, except for the impairment data Americas Europe Asia Holding & other Total Cash/Treasuries/Agencies 18,316 20,952 261 62 39,592 Investment grade corporates 39,434 10,024 3,071 - 52,528 High yield (and other ) corporates 2,913 280 110 - 3,303 Emerging markets debt 1,502 1,474 107 - 3,083 Commercial MBS 4,899 634 526 - 6,059 Residential MBS 4,316 798 74 - 5,189 Non-housing related ABS 2,928 3,264 307 - 6,500 Housing related ABS - 987 - - 987 Subtotal 74,308 38,413 4,456 62 117,240 Residential mortgage loans 24 25,614 - - 25,638 Commercial mortgage loans 7,493 61 - - 7,553 Total mortgages 7,517 25,675 - - 33,192 Convertibles & preferred stock 295 2 - - 297 Common equity & bond funds 436 875 - 114 1,425 Private equity & hedge funds 1,971 122 - 3 2,095 Total equity like 2,701 999 - 117 3,817 Real estate 1,202 1,160 - - 2,362 Other 815 3,274 - 7 4,096 General account (excl. policy loans) 86,543 69,521 4,456 187 160,706 Policyholder loans 2,052 9 18 - 2,079 Investments general account 88,595 69,530 4,473 187 162,784 Impairments as bps (Q1 2016) 4 - 1 - 2 Asset portfolio
  • 19.
    19 Structured assets andcorporate bonds By rating March 31, 2016 amounts in EUR millions AAA AA A BBB <BBB NR Total Structured assets by rating Commercial MBS 4,396 1,068 317 144 135 - 6,059 Residential MBS 2,351 304 205 221 2,109 - 5,189 Non-housing related ABS 3,059 900 1,783 500 258 - 6,500 Housing related ABS - 289 669 28 - - 987 Total 9,805 2,560 2,975 893 2,502 - 18,735 Credits by rating IG Corporates 1,168 4,450 22,465 24,444 - - 52,528 High yield corporate - - 3 3 3,297 - 3,303 Emerging markets debt 82 167 1,042 1,066 720 6 3,083 Total 1,250 4,617 23,510 25,512 4,017 6 58,913 Cash/Treasuries/Agencies 39,592 Total 11,056 7,177 26,484 26,405 6,519 6 117,240 Asset portfolio
  • 20.
    20 US energy &commodity exposure Direct and indirect by rating March 31, 2016 amounts in EUR millions AAA AA A BBB <BBB/NR Total Unrealized gain / (loss) Independent - 3 327 634 139 1,104 (57) Oil field services - 41 181 1 157 380 (77) Midstream - - 231 1,002 85 1,317 (21) Integrated 145 385 445 362 149 1,486 67 Refining - - - 128 48 176 (2) Total energy related 145 429 1,185 2,126 577 4,463 (89) Metals and mining - - 234 303 167 704 (77) Total corporate bonds 145 429 1,419 2,429 744 5,167 (166) Commercial paper - - - 69 - 69 - Real estate LP - - - - - 154 - Total general account exposure 145 429 1,419 2,499 744 5,390 (166) % of US general account.. 6.1% CDS exposure (notional) - - 31 232 49 313 Note: Amounts are fair value per March 31, 2016; 96.9% fair value to amortized cost for corporate bonds Asset portfolio
  • 21.
    21 Underlying earnings Increased toEUR 462 million • Lower earnings in Americas as a result of lower fee income from lower markets, one-time employee expenses, reduction of VA closed block balances and recurring earnings impact following assumption changes and model updates implemented in Q3 2015 • Earnings in Europe increased as a result of the write down of DPAC in the UK and normalization of surrenders in Poland • Asia earnings improved due to higher earnings from High Net Worth businesses • Earnings in Asset Management remained high, as higher management and performance fees were offset by higher expenses mainly related to growth of the business Financials 45 38 45 Q1 15 Q4 15 Q1 16 Americas (USD million) Asia (USD million) Asset Management (EUR million) Europe (EUR million) 141 142 169 Q1 15 Q4 15 Q1 16 327 339 312 Q1 15 Q4 15 Q1 16 (3) 3 1 Q1 15 Q4 15 Q1 16 Underlying earnings before tax
  • 22.
    22 Fair value items Impactedby alternative investments and hedge programs Total of EUR (358) million Financials Note: FV hedging with accounting match excludes changes in own credit spread and other non-hedged items Americas: (135)  Alternative investments (-)  Real estate (-)  Credit derivatives (-) Netherlands: 31  Real estate (+) US GMWB: 7  Interest rates (-)  Other (+) Netherlands guarantees: (108)  Credit related hedges (+)  Accounting mismatch on interest rate hedges (-)  Other (-) US macro hedging: (92)  Equity (-)  IUL product hedge (-)  Interest rate hedges (+)  Other (-) Other: (1) • Chinese equity portfolio (-) • Other FV items (+) FV hedging with accounting match EUR (101) million Derivatives ∆: EUR 2,314m Liability ∆: EUR (2,415)m FV hedging without accounting match EUR (152) million Derivatives ∆: EUR (110)m Liability ∆: EUR (42)m FV other EUR (1) million FV investments EUR (104) million Netherlands: (26)  Duration management (-)  Other (+) UK: 7  Inflation hedge (+)  Equity (+) Holding: (41)  Perpetual securities and LT debt (-)
  • 23.
    23 Gross deposits Increased toEUR 30.1 billion • Higher gross deposits in the Americas as a result of the Mercer acquisition, growth in pensions and mutual funds, partially offset by lower deposits in variable annuities • Gross deposits in Europe up 12% due to continued strong performance from Knab and growth of the platform business in the UK • Gross deposits in Asia were down as the comparable quarter in 2015 benefited from higher deposits in anticipation of lower commissions on VA in Japan • Growth in third party gross flows in Asset Management more than doubled as a result of higher flows in AIFMC, driven by a higher recognized gross flows, and proportional inclusion of LBPAM Financials Americas (USD billion) Asia (USD million) Asset Management (Third party; EUR billion) Europe (EUR billion) Gross deposits 3.1 3.1 3.4 Q1 15 Q4 15 Q1 16 228 68 80 Q1 15 Q4 15 Q1 16 13.0 9.3 14.9 Q1 15 Q4 15 Q1 16 5.8 12.2 13.2 Q1 15 Q4 15 Q1 16
  • 24.
    24 New life sales Amountedto EUR 266 million • New life sales in the Americas were stable, as higher indexed UL sales offset lower sales in standard UL and term life products • Lower new life sales in Europe as higher sales in Turkey were more than offset by lower sales in Poland • New life sales in Asia declined, as higher sales in strategic partnerships were more than offset by lower sales from High Net Worth businesses Financials Americas (USD million) Asia (USD million) Europe (EUR million) New life sales 93 94 85 Q1 15 Q4 15 Q1 16 158 167 158 Q1 15 Q4 15 Q1 16 73 29 41 Q1 15 Q4 15 Q1 16
  • 25.
    25 MCVNB of EUR133 million Impacted by margin pressure, low interest rates and methodology change • Higher MCVNB in the Americas mainly driven by a higher contribution from life insurance, offsetting a lower contribution from VA • MCVNB in Europe decreased as a result of a change in the product mix for pensions in the Netherlands • MCVNB in Asia declined, driven by lower sales, lower interest rates and widening credit spreads Financials Americas (USD million) Asia (USD million) Europe (EUR million) 64 46 56 Q1 15 Q4 15 Q1 16 70 111 89 Q1 15 Q4 15 Q1 16 16 2 (5) Q1 15 Q4 15 Q1 16 Market consistent value of new business Note: There is no MCVNB recognized on new Asset Management business
  • 26.
    26 Operating expenses Increased toEUR 960 million • Operating expenses in the Americas increased driven by the Mercer acquisition and one-time employee expenses • Operating expenses in Europe remained stable as lower restructuring expenses in NL were offset by expense growth in the UK as a result of upgrading policies from the back book and Spain • Increase in operating expenses in Asia driven by higher expenses in China and the increase in Aegon’s stake in its strategic partnership in India from 26% to 49% • Operating expenses in Asset Management up mainly due to business growth, currency movements, elevated project-related expenses and the inclusion of costs relating to the partnership with LBPAM Financials Operating expenses Americas (USD million) Asia (USD million) Asset Management (EUR million) Europe (EUR million) 359 388 360 Q1 15 Q4 15 Q1 16 450 472 479 Q1 15 Q4 15 Q1 16 38 36 43 Q1 15 Q4 15 Q1 16 96 126 114 Q1 15 Q4 15 Q1 16
  • 27.
    27 Capital generation andcapital buffer Impacted by adverse financial markets • Capital generation of EUR 0.3 billion, excluding market impacts of EUR (0.7) billion and one-time items of EUR (0.2) billion • Capital buffer in the holding decreased to EUR 1.0 billion driven by completion of the first tranche of the share buyback and investments in country units Financials Capital generation (EUR billion) Holding capital buffer development (EUR billion) Q1 16 Capital generation (0.6) Market impacts & one-time items (0.9) Capital generation excluding market impacts & one-time items 0.3 Holding funding & operating expenses (0.1) Free cash flow 0.2 Q4 15 Q1 16 Starting position 1.8 1.4 Net dividends received from units 0.2 (0.1) Acquisitions & divestments - - Dividends & share buyback - (0.2) Funding & operating expenses (0.1) (0.1) Leverage issuances/redemptions (0.5) - Other 0.0 (0.0) Ending position 1.4 1.0
  • 28.
    28 2012 2013 20142015 Q1 2016  Payout annuities 0.5 0.5 0.4 0.4 0.4  Institutional spread-based business 0.6 0.4 0.3 0.3 0.2  BOLI/COLI 0.5 0.5 0.6 0.4 0.4  Life reinsurance 1.1 0.7 0.6 0.6 0.3 2.7 2.1 2.0 1.7 1.3 Capital allocated to run-off businesses Further reduced in Q1 2016 • Current capital allocated to run-off businesses of USD 1.3 billion • Capital intensive run-off businesses negatively impact return on equity - Capital allocated to run-off businesses included in RoE calculations, but earnings are excluded • Reduction of USD 0.3 billion of capital due to accounting change - Part of the ambition to reduce capital allocated to run-off businesses by USD 1 billion by 2018 Financials Allocated capital to run-off businesses (USD billion)
  • 29.
    29 Main economic assumptions USNL UK Exchange rate against euro 1.10 n.a. 0.71 Annual gross equity market return (price appreciation + dividends) 8% 7% 7% US NL UK 10-year government bond yields Develop in line with forward curves per year-end 2015 10-year government bond yields Grade to 4.25% in 10 years time Credit spreads Grade from current levels to 110 bps over four years Bond funds Return of 4% for 10 years and 6% thereafter Money market rates Remain flat at 0.2% for two quarters followed by a 9.5-year grading to 2.5% Main assumptions for US DAC recoverability Main assumptions for financial targets Overall assumptions Financials
  • 30.
    30 Earnings sensitivities To equitymarkets and reinvestment yields • Protection of capital position main purpose of macro hedging program • IFRS accounting mismatch between hedges and liabilities - GMIB liability carried at amortized cost (SOP 03-1) - Macro hedge carried at fair value Financials * Average impact of flat reinvestment yields on underlying earnings per quarter in 2016, 2017 and 2018 compared to 2015 Macro hedge equity sensitivity estimates Total equity return in quarter Fair value items impact -8% ~USD (10) million +2% (base case) ~USD (60) million +12% ~USD (140) million Estimated sensitivity for underlying earnings to flat reinvestment yields* 2016 ~USD (10) million per quarter 2017 ~USD (15) million per quarter 2018 ~USD (25) million per quarter • Limited reinvestment risk moderates impact on underlying earnings of low US interest rates - ~5% of general account assets reinvested per annum as a result of declining spread balances
  • 31.
    31 Investing in Aegon •Aegon ordinary shares - Traded on Euronext Amsterdam since 1969 and quoted in euros • Aegon New York Registry Shares (NYRS) - Traded on NYSE since 1991 and quoted in US dollars - One Aegon NYRS equals one Aegon Amsterdam-listed common share - Cost effective way to hold international securities Financials Aegon’s ordinary shares Aegon’s New York Registry Shares Ticker symbol AGN NA ISIN NL0000303709 SEDOL 5927375NL Trading Platform Euronext Amsterdam Country Netherlands Aegon NYRS contact details Broker contacts at Citibank: Telephone: New York: +1 212 723 5435 London: +44 207 500 2030 E-mail: citiadr@citi.com Ticker symbol AEG US NYRS ISIN US0079241032 NYRS SEDOL 2008411US Trading Platform NYSE Country USA NYRS Transfer Agent Citibank, N.A.
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    32 Disclaimer Cautionary note regardingnon-IFRS measures This document includes the following non-IFRS financial measures: underlying earnings before tax, income tax, income before tax and market consistent value of new business. These non-IFRS measures are calculated by consolidating on a proportionate basis Aegon’s joint ventures and associated companies. The reconciliation of these measures, except for market consistent value of new business, to the most comparable IFRS measure is provided in note 3 ‘Segment information’ of Aegon’s Condensed Consolidated Interim Financial Statements. Market consistent value of new business is not based on IFRS, which are used to report Aegon’s primary financial statements and should not be viewed as a substitute for IFRS financial measures. Aegon may define and calculate market consistent value of new business differently than other companies. Aegon believes that these non-IFRS measures, together with the IFRS information, provide meaningful information about the underlying operating results of Aegon’s business including insight into the financial measures that senior management uses in managing the business. In addition, return on equity is a ratio using a non-IFRS measure and is calculated by dividing the net underlying earnings after cost of leverage by the average shareholders’ equity excluding the preferred shares, the revaluation reserve and the reserves related to defined benefit plans. Local currencies and constant currency exchange rates This document contains certain information about Aegon’s results, financial condition and revenue generating investments presented in USD for the Americas and Asia, and in GBP for the United Kingdom, because those businesses operate and are managed primarily in those currencies. Certain comparative information presented on a constant currency basis eliminates the effects of changes in currency exchange rates. None of this information is a substitute for or superior to financial information about Aegon presented in EUR, which is the currency of Aegon’s primary financial statements. Forward-looking statements The statements contained in this document that are not historical facts are forward-looking statements as defined in the US Private Securities Litigation Reform Act of 1995. The following are words that identify such forward-looking statements: aim, believe, estimate, target, intend, may, expect, anticipate, predict, project, counting on, plan, continue, want, forecast, goal, should, would, is confident, will, and similar expressions as they relate to Aegon. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Aegon undertakes no obligation to publicly update or revise any forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which merely reflect company expectations at the time of writing. Actual results may differ materially from expectations conveyed in forward-looking statements due to changes caused by various risks and uncertainties. Such risks and uncertainties include but are not limited to the following:  Changes in general economic conditions, particularly in the United States, the Netherlands and the United Kingdom;  Changes in the performance of financial markets, including emerging markets, such as with regard to: ► The frequency and severity of defaults by issuers in Aegon’s fixed income investment portfolios; ► The effects of corporate bankruptcies and/or accounting restatements on the financial markets and the resulting decline in the value of equity and debt securities Aegon holds; and ► The effects of declining creditworthiness of certain private sector securities and the resulting decline in the value of sovereign exposure that Aegon holds;  Changes in the performance of Aegon’s investment portfolio and decline in ratings of Aegon’s counterparties;  Consequences of a potential (partial) break-up of the euro or the potential exit of the United Kingdom and/or Greece from the European Union;  The frequency and severity of insured loss events;  Changes affecting longevity, mortality, morbidity, persistence and other factors that may impact the profitability of Aegon’s insurance products;  Reinsurers to whom Aegon has ceded significant underwriting risks may fail to meet their obligations;  Changes affecting interest rate levels and continuing low or rapidly changing interest rate levels;  Changes affecting currency exchange rates, in particular the EUR/USD and EUR/GBP exchange rates;  Changes in the availability of, and costs associated with, liquidity sources such as bank and capital markets funding, as well as conditions in the credit markets in general such as changes in borrower and counterparty creditworthiness;  Increasing levels of competition in the United States, the Netherlands, the United Kingdom and emerging markets;  Changes in laws and regulations, particularly those affecting Aegon’s operations’ ability to hire and retain key personnel, the products Aegon sells, and the attractiveness of certain products to its consumers;  Regulatory changes relating to the pensions, investment, and insurance industries in the jurisdictions in which Aegon operates;  Standard setting initiatives of supranational standard setting bodies such as the Financial Stability Board and the International Association of Insurance Supervisors or changes to such standards that may have an impact on regional (such as EU), national or US federal or state level financial regulation or the application thereof to Aegon, including the designation of Aegon by the Financial Stability Board as a Global Systemically Important Insurer (G-SII).  Changes in customer behavior and public opinion in general related to, among other things, the type of products also Aegon sells, including legal, regulatory or commercial necessity to meet changing customer expectations;  Acts of God, acts of terrorism, acts of war and pandemics;  Changes in the policies of central banks and/or governments;  Lowering of one or more of Aegon’s debt ratings issued by recognized rating organizations and the adverse impact such action may have on Aegon’s ability to raise capital and on its liquidity and financial condition;  Lowering of one or more of insurer financial strength ratings of Aegon’s insurance subsidiaries and the adverse impact such action may have on the premium writings, policy retention, profitability and liquidity of its insurance subsidiaries;  The effect of the European Union’s Solvency II requirements and other regulations in other jurisdictions affecting the capital Aegon is required to maintain;  Litigation or regulatory action that could require Aegon to pay significant damages or change the way Aegon does business;  As Aegon’s operations support complex transactions and are highly dependent on the proper functioning of information technology, a computer system failure or security breach may disrupt Aegon’s business, damage its reputation and adversely affect its results of operations, financial condition and cash flows;  Customer responsiveness to both new products and distribution channels;  Competitive, legal, regulatory, or tax changes that affect profitability, the distribution cost of or demand for Aegon’s products;  Changes in accounting regulations and policies or a change by Aegon in applying such regulations and policies, voluntarily or otherwise, which may affect Aegon’s reported results and shareholders’ equity;  The impact of acquisitions and divestitures, restructurings, product withdrawals and other unusual items, including Aegon’s ability to integrate acquisitions and to obtain the anticipated results and synergies from acquisitions;  Catastrophic events, either manmade or by nature, could result in material losses and significantly interrupt Aegon’s business; and  Aegon’s failure to achieve anticipated levels of earnings or operational efficiencies as well as other cost saving and excess capital and leverage ratio management initiatives. Further details of potential risks and uncertainties affecting Aegon are described in its filings with the Netherlands Authority for the Financial Markets and the US Securities and Exchange Commission, including the Annual Report. These forward-looking statements speak only as of the date of this document. Except as required by any applicable law or regulation, Aegon expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Aegon’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.